Cookies are temporary files we place on your device to improve your user experience, for example to sign up and log in to your account. Find out more about cookies, and how to control them, in our privacy policy. By continuing to use our site, you agree to this policy

With ISA season well underway, LendingCrowd reveals that transfers to its fintech lending platform are more likely to come from Cash ISAs than any other type of tax-free account.

LendingCrowd, which launched
in late 2014, was one of the first platforms to offer an Innovative Finance ISA
(IFISA) and now has three different investing options, all of which can be held
within the same tax-free wrapper.

Edinburgh-based
LendingCrowd is regulated by the Financial Conduct Authority and specialises in
lending to established British business. Its analysis shows that, since
launching its IFISA in February 2017, 66% of transfers have been from Cash
ISAs.

Meanwhile, Stocks &
Shares ISAs accounted for 18% of transfers to LendingCrowd, and the remaining
16% were from IFISAs previously held with rival fintech platforms. In value
terms, Cash ISAs made up 68% of the total transferred to LendingCrowd, while
Stocks & Shares ISAs accounted for 23% and IFISAs 9%.

IFISAs, which were
introduced by the UK Government in April 2016 and can only be provided by
platforms that are authorised by HM Revenue & Customs, enable investors to
earn tax-free* interest and income on peer-to-peer loans.

According to a survey by
trade body TISA (Tax Incentivised Savings Association), over £620 million was
invested in IFISAs by February 2019. That is more than double the £290 million
that HM Revenue & Customs (HMRC) said was held in IFISAs at the end of
2017/18 tax year.

HMRC data shows that the average
investment in an IFISA last tax year was £9,355 – that compares with the
average Cash ISA subscription of £5,114. The number of Cash ISAs opened each
year has been falling steadily for the past decade – from 12.2 million in
2008/09 to 7.8 million in 2017/18.

With inflation currently
running at 1.8%, money held in many Cash ISAs is actually falling in value once
the cost of living is taken into account. According to personal finance data
provider Moneyfacts, the highest rate
offered by an instant-access Cash ISA is 1.5%.

LendingCrowd’s Growth
ISA targets a return of 6% a year by automatically creating a diversified
portfolio of business loans. Capital and interest repayments are automatically
reinvested in additional loans, increasing diversification over time. The
platform’s Income ISA works in a similar way, with the key difference being
that investors can withdraw their interest while their capital repayments are
reinvested.

For sophisticated investors
who have the time to hand-pick the business they want to lend to, LendingCrowd
offers a Self Select ISA. Lending rates range from 5.95% to 14.25%, depending
on the borrower’s credit rating.

Stuart Lunn, founder and
CEO of LendingCrowd, said: “It’s clear that Cash ISAs are falling out of favour
among savers who are tired of seeing the value of their money eroded by
inflation. Our IFISA is proving extremely popular, and we expect demand to
continue rising rapidly as more people realise their money could be working
much harder for them.”

LendingCrowd is currently offering new and existing investors up to 3% cashback when they invest at least £2,500 on the platform by 30 April 2019. Those who transfer an ISA of £5,000 or more from another provider can earn an additional £50 bonus. Terms apply. For more details, visit: www.lendingcrowd.com/isa-season-2019-cashback-offer/

*Tax treatment depends on the individual circumstances of each investor and may be subject to change in future. LendingCrowd and its Innovative Finance ISA products are not covered by the Financial Services Compensation Scheme.

Founded in 2014 and based in Edinburgh,
LendingCrowd matches investors looking for a greater return with small
businesses seeking finance to grow. LendingCrowd has facilitated over 610 loans
to SMEs across Britain, totalling more than £53 million (with over £12 million
loaned in Scotland). The company was one of the first fintech lenders to
receive full FCA authorisation in 2016 and launched its first Growth ISA in
2017. To date, almost 7,000 investors have signed up to the platform.
LendingCrowd is backed by Scottish angel syndicate Equity Gap, the Scottish
Investment Bank (the investment arm of Scottish Enterprise) and a number of
prominent investors from Scotland’s finance and entrepreneurial scene.

If you invest through LendingCrowd you should understand that your capital is at risk.

LendingCrowd is the trading name of Edinburgh Alternative Finance Limited, Company Number SC468392, authorised and regulated by the Financial Conduct Authority (Firm reference number 670991). LendingCrowd and its products are not covered by the Financial Services Compensation Scheme.